John Bravata, who grew up in Kalamazoo and ran a Southfield real estate investment company called BBC Equities, has been charged by the U.S. Attorney in Detroit with one count of wire fraud.

Bravata "knowingly participated in a scheme to defraud investors," according to a press release from U.S. Attorney Barbara McQuade issued Friday.

Bravata was in the custody of the U.S. Marshals Service in New York on Friday and was to be returned to Michigan.

Wire fraud carries a maximum penalty of 20 years in prison and a $250,000 fine.

This is the first time that Bravata is facing a criminal charge. Bravata, his business partner and other Bravata family members were charged in civil court with fraud by the U.S. Securities and Exchange Commission in July 2009. That case is pending.

Bravata's business partner, Richard Trabulsy, was not charged with a crime.

From 2006 to 2009, Bravata told investors in BBC Equities that their money would be used to purchase real estate and that he received no salary or commissions, according to a criminal complaint filed in the case. But, "Bravata did receive compensation as manager of BBC and paid himself from investor proceeds regardless of whether BBC earned a profit," the complaint states.

During 2007, Bravata received commissions totaling more than $386,000 from the investments he secured, the complaint states.

Bravata also received more than $2.1 million in salary from 2007 to 2009 and additional compensation of more than $2.4 million between 2006 and 2009, the complaint states.

Of the more than $50 million BBC Equities collected from investors, no more than $20.7 million was spent on real estate, the complaint states.

"Moreover, many of the properties purchased by BBC were highly leveraged, meaning that they were encumbered by large mortgage loans and thus had little to no equity," the complaint states. "Investor proceeds were utilized as a general slush fund for the personal use of Bravata and others, for investments in other business ventures overseen by Bravata, and to solicit new investors and/or make payments to existing investors."

A court-appointed receiver charged with recovering investor funds said in January that it's unlikely investors will see "any significant recovery."

The receiver, Earle Erman, said in a court filing that the claims against BBC Equities from more than 400 investors totaled more than $47 million, taking into account money that was paid out as dividends to some investors. But Erman had only been able to recover about $130,000. And he racked up $757,000 in fees doing so.

Bravata had been defending himself in the SEC case after his attorney was convicted of fraud last year in an unrelated case.

The Gazette was unable to locate a new attorney for Bravata.

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